midas update

Midas Update: Kalahari rises 69 per cent in a monthMidweek Midas, the online column available free to all Midas readers, recommended Kalahari Minerals at the beginning of February. Less than four weeks later, the share price has risen 69 per cent.

Kalahari is an Aim-traded company whose main attraction is its 40 per cent stake in Australian miner Extract Resources. Extract has extensive uranium interests in Namibia and its findings so far have been some of the most exciting the industry has seen in decades.

In January, the group revealed it had discovered deposits that would yield 108million pounds of uranium oxide concentrate at its key mine, Rossing South. Brokers expect there will be news of similar magnitude in July or August this year.

Not only are Extract's discoveries substantial, they are also high-grade and therefore particularly valuable. Kalahari's stake in Extract may seem convoluted but it offers London investors access to one of the most rewarding uranium stocks in the world.

Intriguingly, the company has attracted the interest of two very different investors. The first is mining giant Rio Tinto and the second is Emerging Metals, a company run by Stephen Dattels, who founded UraMin, a Midas recommendation that sold out at a huge premium to France's Areva two years ago.

Both investors have been buying Kalahari in recent weeks and have chased the price up from 43p in early February to 723/4p today.

Midas verdict: There is no doubt that Kalahari's stake in Extract Resources is extremely valuable. The company has already made several big discoveries and it should continue to deliver over the next few years. But the recent increase in Kalahari's share price has been driven more by technical factors than any fundamental developments in the business.

Long term, Kalahari shares could hit 100p or more, but the price is likely to pause for breath in the next few weeks. Midas does not normally advocate short-term trading, but a 70 per cent price rise within weeks is not normal either.

Investors who bought at 43p should sell half their holding and await further developments. Investors new to the stock should wait and see if the price dips before buying shares.

http://www.dailymail.co.uk:80/money/article-1158057/MIDAS-Amlin-poised-benefit-market-shake-up.html